Overcoming Buyer-Seller Tensions in the Pre-Acquisition Process

Abstract

Larger firms are increasingly acquiring innovative new ventures at an early stage. Despite significant integration challenges with these acquisitions, the elongated pre-acquisition process of aligning buyers’ and sellers’ different objectives is rarely studied. By studying nine academic spin-off acquisitions, we develop a three-phase model outlining the temporal dynamics of the pre-acquisition process. In each phase—namely, strategic fit, synergy confidence, and deal structure—a specific buyer-seller tension emerges. By showing how each of these tensions needs to be overcome prior to an acquisition event, our dialectical model complements the dominant focus on post-integration activities in the acquisition literature.